United States

Production tax credit stuck in mediation process

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The US wind production tax credit (PTC), caught in legislative limbo since it expired at the end of last year, moved one step closer to revival in June when the House of Representatives passed a two-year extension as part of an unrelated corporate tax bill. But the country's wind industry may still have to wait until fall before it can once again factor the credit, worth $0.018/kWh, into project financing. The US Senate passed its own version of the corporate tax bill, containing a three-year PTC extension, in May. The two bills now go to a so-called conference committee where differences are hammered out and where negotiations are expected to be difficult. While both bills are aimed at ending an export subsidy that has prompted the EU to impose retaliatory tariffs on some US goods, they are widely divergent, not only in how they approach that issue but in the number of special interest add-ons they contain. The Senate bill contains $19 billion in energy tax breaks and financial incentives and restrictions on workers' overtime that are not in the House bill. For its part, the House tacked on a $9.6 billion tobacco buyout and a state sales tax deduction that the Senate did not. Final action on the legislation may not occur until September and may even be held up until a "lame duck" session following the November elections, says the American Wind Energy Association's Jaime Steve. Even then, if the committee opts for the House's two-year extension, backdated to the start of this year and expiring at the end of 2005, it would leave developers with only a year to get projects in the ground before the legislative roller coaster begins again.